Japan's NHI drug pricing system reform makes little progress

With the instalment of the new Democratic Party of Japan (DPJ) of Prime Minister Yukio Hatoyama and the appointment of Health Minister Akira Nagatsuma, the country's pharmaceutical industry is anxiously looking for developments that will affect its operations, but so far there has been little in the way of encouragement.

At the first meeting of the Expert Subcommittee on National Health Insurance (NHI) Pricing Affairs of the Chuikyo (Japan's Central Social Insurance Medical Council) under the new regime, there was discussion of the reforms proposed by the Federation of Pharmaceutical Manufacturers Associations of Japan (FPMAJ) on NHI reform, calling for the introduction of an exceptional price maintenance system, but no concrete talks were initiated.

However, reports Pharma Japan, little progress was made, as another trade body, the Japan Pharmaceutical Manufacturers Association (JPMA), reconfirmed its conservative attitude, saying that 'we feel that the promotion of the development of unapproved drugs has been proposed in exchange for approval of the exceptional price maintenance system. We feel we are being induced to accept the FPMAH-proposed system in exchange for something we like.'

The future of the NHI pricing reform has become increasingly unpredictable as the decision-making process that will be adopted by the new government for the revision of medical fees remains unclear, on top of the fact that concrete discussion on the details have not be initiated by the Subcommittee.

Akira Nagano, a member of the expert panel of the Chuikyo, who is chairman of the FPMAJ's Study Committee on NHI Drug Pricing and an executive of Daiichi Sankyo, has previously explained that the core of the Association's plan consists of maintaining the price of new drugs during their patent-valid period and introducing generic copies immediately after intellectual property expiration of the original products. This would enable generics to enter the market more easily, but would also help prevent the current downward tendency of the new drug prices whenever their revision is implemented, as well as reducing drug expenditure.

Total pharma market reduction envisaged

In the FPMAJ's projected model, when the government policy of promoting the use of generics continues and the FPMAJ's new drug pricing system is introduced, the market for new prescription medicines and original products will shrink by 7,700.0 billion yen ($86.3 billion), while that for generic copies will grow by 6,000.0 billion yen, resulting in an overall reduction of 1,700.0 billion yen in the total pharmaceutical market between 2010 and 2020.